Deed of Postponement Indemnity Insurance Bank conveyancing requirements
Bank of Scotland and Skipton, in common with most mortgage companies, have their own specific instructions when it comes to deed of postponement indemnity insurance. The purpose of this page to assist domestic conveyancing firms on the different mortgage company conveyancing panel where the title to be charged incorporates deed of postponement. Solicitors should still check the CML handbook requirements for each mortgage company, for example Godiva Mortgages, Lloyds TSB or Yorkshire Bank Home Loans. The information on this page Is not to be read as deed of postponement indemnity insurance advice.
Need help with deed of postponement indemnity insurance from your lender?
Nationwide and Natwest as with the majority of mortgage companies, instructions are such that where deed of postponement indemnity insurance is to be taken out:
- you are responsible for approving the terms of the deed of postponement policy on behalf of the lender
- you must send a copy of the deed of postponement indemnity insurance to the borrower and explain to the mortgagor why the deed of postponement indemnity insurance policy was effected and that a further policy might be required if there is additional borrowing against the mortgaged property
- your firm is required to reveal to the insurer all relevant information which you have gathered
- your practice must point out to the mortgagor that the borrower will need to adhere to any conditions of the deed of postponement indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in respect of the policy
- the deed of postponement indemnity insurance policy should be effected at no charge to the mortgage company
- the deed of postponement indemnity insurance policy must not incorporate terms that you recognise would invalidate or compromise the interests of the bank
- the deed of postponement indemnity insurance policy should always be for the benefit of the lender and, wherever possible, for the benefit of the borrower and any subsequent registered proprietor or bank. Where the borrower will not be covered by the deed of postponement indemnity insurance policy, you must advise the borrower of this fact.
- the level of indemnity must satisfy the requirements for the lender (See Part II Handbook requirements )
| Lender | Requirement |
|---|---|
| Birmingham Bank | Please contact Head of Operations to discuss (Jackie Burchill) |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Clydesdale Bank | Open market value of property. |
| Harpenden Building Society | 110% of mortgage advance |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Lloyds | The value of the property. |
| Magellan Homeloans | At least equal to the value of the property |
| Masthaven Bank | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Molo Finance Buy to Let | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgages. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| National Westminster Bank | An amount equal to the value of the property. |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
| Whistletree | The value of the property |
Deed of Postponement Contingency Insurance : Reflections
The extent of the terms for deed of postponement indemnity insurance are shown in the policy document. Conveyancing solicitors should point your non-lender client to the deed of postponement indemnity insurance policy itself. The intention of deed of postponement indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so you should check the schedule to ensure it is as it should be. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Deed of Postponement Contingency insurance: Significant characteristics and benefits:
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the deed of postponement indemnity insurance schedule. Deed of Postponement indemnity insurance Policies are likely to cover the following- Liability for damages or compensation incurred in any proceedings concerning the risks specified in the deed of postponement policy, as well as solicitors charges.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the deed of postponement indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Market value reduction due to the successful enforcement of the risks specified in the deed of postponement policy.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- The cost of altering or taking down all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the deed of postponement indemnity insurance.
Don't forget to check what is excluded from the deed of postponement policy e.g. does the policy cover any property that has been altered within the 12 months prior to the policy being put on risk? Does it cover legal costs?
Deed of Postponement Indemnity Insurance has limitations - Other considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from deed of postponement insurance may be adequate for your client. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most deed of postponement Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The content set out above covers to properties in England and Wales.